Sumber : Istimewa
A storm continues to batter the Indonesian insurance industry. A number of insurance companies are still burning and need to be extinguished by regulators, owners, and managers. Take AJB Bumiputera, for example, whose survival remains uncertain and whose assets are slowly being sold off to pay off its mounting debts, which exceed its assets. The only way to survive, through demutualization, is hampered by political interests.
Similarly, Asuransi Bangun Askrida, which has left its 27 provincial governments, its shareholders, struggling. Not only has it been unable to pay dividends since 2023, but it must also inject capital to cover its liabilities, which far exceed its assets.
The same case happens to Nasional Reasuransi, whose capital remains negative Rp 1.70 trillion and its risk-based capital (RBC) is minus 160.81% as of June 2026. The collapse of Bangun Askrida and NasRe has dragged the general insurance industry into losses of up to Rp 8.9 trillion, an unprecedented loss for the general insurance industry. In 2025, the general insurance industry recorded a 276.97% increase in profits to Rp 15.81 trillion. Unfortunately, the risk of declining profits looms again this year. As of May 2026, it had fallen 20.23% to Rp 5.50 trillion.
This decline signals the difficulty insurance companies face in generating profits amid a sluggish economy, particularly due to non-inclusive economic growth. According to Infobank Research Bureau in the rating on 111 of insurance companies in 2026, insurance company profitability is being pressured by four factors.
The first factor is the high healthcare inflation, which reached 17.20%, or twice the rate of healthcare inflation in Asia, and fictitious claims in health insurance involving policyholders and medical personnel. Health insurance was the insurance industry’s last growth engine, but it was struggling. With the claims ratio exceeding 100%, general insurance companies have abandoned this line.
The second factor is the collapse of the exchange rate, which reached Rp 18,000 per USD, affecting the price of motor vehicle spare parts, has increased the burden of insurance claims.
The third factor is the additional investment and operational costs to implement PSAK 117, as the new standard requires fundamental changes to technological systems, human resource (HR) training, and complex actuarial calculations. The complexity is so great that some companies are willing to incur late fees for submitting reports to the Financial Services Authority (OJK). This is despite the OJK having granted a relaxation of the 2025 audited financial reporting deadline from April 30 to June 30. However, as of July 30, eleven general insurance companies and six life insurance companies had not yet issued their financial reports by the end of July 2026.
The fourth factor is the collapse of the stock market which eroded the insurance industry’s investment vault. The insurance industry’s investment in shares also shrank from Rp 126.49 trillion as of the end of 2025 to Rp 106.51 trillion as of May 2026. This decline was contributed by the life insurance industry, whose investment in shares plunged from Rp 120.86 trillion to Rp 101.16 trillion. In total investment in the life insurance, general insurance and reinsurance industries, the investment pool decreased from Rp 713.25 trillion to Rp 669.67 trillion in the first five months of 2026.
However, the decline in profits is being suffered by the general insurance industry, which as of May 2026 amounted to Rp 5.50 trillion or a drop of 20.23% compared to the same period in 2025. Meanwhile, gross premiums, which in the PSAK 117 standard are liabilities, also decreased 5.12% to Rp 44.65 trillion. In 2025, 18 general insurance companies are known to record a decline in profits, and 7 will even suffer losses. Meanwhile, in the life insurance industry, 11 companies experienced a decline in profits and 7 companies suffered losses.
The depressed profitability of the insurance business adds to the efforts of lower-level insurance companies to meet the minimum capital requirement of Rp 250 billion, the deadline for which is the end of 2026. Infobank Research Bureau noted that the owners of 17 general insurance companies and 6 life insurance companies must take strategic steps this year so that their companies are not subject to regulatory sanctions. Even if shareholders must fast or withhold all profits for 2025 and 2026, this will not necessarily be sufficient.
Even for insurance companies that meet the minimum capital of Rp 250 billion, the problem will not immediately be resolved. In accordance with OJK Regulation Number 23 of 2023, the minimum capital requirement increases to a minimum of Rp 500 billion in 2028. At that stage, OJK divides insurance companies into two groups based on capital size. Equity-based insurance company group (KPPE) 1 is subject to a minimum capital of Rp 500 billion for conventional insurance and KPPE is subject to a minimum capital of Rp 1 trillion, while reinsurance capital is a minimum of Rp 2 trillion. The capital requirements for sharia insurance companies are smaller, namely Rp 200 billion for KPPE 1 and Rp 500 billion for KPPE 2.
If we rely on retained earnings in the 2027 and 2028 financial years, lower-level insurance companies will be on an upward trajectory. According to data from Infobank Research Bureau, the ability of lower-level insurance companies to make profits is relatively limited. If the 10 general insurance companies that achieved profits are summed, the total profit in 2025 will only be Rp 215.88 billion or an average of Rp 21.58 billion per company.
Meanwhile, the combined capital is Rp 1,806.90 or Rp 180.69 billion per company. Therefore, in order to accumulate profits as the cheapest source of capital, lower-level insurance companies must record an increase of at least 5% per year. The problem is that some general insurance companies in 2025 will only make a profit of Rp 8.66 billion, such as achieved by Candi Utama Insurance, Rp 7.91 billion achieved by Arthagraha General Insurance, and Rp 1.81 achieved by Rama Satria Wibawa Insurance. In fact, six general insurance companies with capital of less than Rp 250 billion experienced losses, such as Asuransi For All, Asuransi Harta Aman Pratama, Bosowa Asuransi, Citra Internasional Underwriters, Asuransi ASEI Indonesia, and Asuransi Etiqa Internasional Indonesia.
Therefore, it is too difficult to simply retain profits as capital for small general insurance companies amidst profitability pressures, so the solution is that the owner must add new capital or take two other paths, namely a merger or collaborating with strategic investors. Merger steps are being carried out. Those whose capital has reached Rp 250 billion cannot sleep comfortably. Because, they have to double their capital to a minimum of Rp 500 trillion by 2028.
This is what Asuransi Cakrawala Proteksi (CaPro) and Asuransi Candi Utama, both majority-owned by renowned businessman Arsjad Rasjid through several investment companies, intend to do. Bringing these two insurance companies into compliance with regulatory requirements is certainly a consideration for the owners. After failing to sell Candi shares to a German strategic investor, the shareholders decided to merge the two insurance companies this year.
Meanwhile, practitioners in the insurance industry are actually hoping for relaxation from the Financial Services Authority (OJK). Investor interest in rupiah-based assets is declining, and government policies are incapable of generating market demand, resulting in stagnant general insurance premium growth. “It’s not about demanding healthy insurance companies. For owners, why increase capital if the existing capital capacity is unproductive and the risk-based capital (RBC) remains high?” said an Infobank source at an insurance company.
According to another Infobank source, the OJK’s current priority is resolving a number of troubled insurance companies, teetering on the edge of life and death due to undercapitalization. “Why are insurance companies that are no longer viable for operation allowed to survive, while we, a healthy company, are subject to sanctions simply because our capital does not reach Rp 250 billion?” he concluded.
Meanwhile, the Indonesian General Insurance Association (AAUI) appears to be letting its members die because of deadly regulations. There’s no such struggle as AAUI waged when Bapepam-LK insisted on requiring insurance companies to have a minimum capital of Rp 100 billion in 2010. According to Infobank’s records, AAUI successfully rescued 36 general insurance companies when the regulator heeded their demands to relax the Rp 100 billion capital requirement deadline from 2010 to 2014.
When contacted by Infobank, Budi Herawan, AAUI’s Chairman, admitted that his organization had conveyed this request to the Financial Services Authority (OJK). He argued that economic pressures and low investment returns had weakened shareholder interest, leading some companies to request a relaxation or postponement of the capital requirement deadline. “We’ve conveyed everything, but there hasn’t been a response from the regulator,” he said when contacted by Infobank last month.
Meanwhile, the OJK stated that there are no plans to relax the minimum capital requirement for insurance companies. “We continue to push for compliance. Currently, there are no plans for relaxation.
Those who fail to comply will be asked to develop an action plan, but they will still be subject to sanctions. Another aspect that shareholders need to consider is the implementation of a policy guarantee scheme, which may also require compliance with this equity,” Iwan Pasila, Deputy Commissioner of the Financial Services Authority (OJK), told Infobank last month.
THREE CHALLENGES FOR THE INSURANCE INDUSTRY IN 2026
With a population of 280 million, Indonesia is like an uninsured “giant.” Insurance penetration is only 3% of gross domestic product (GDP). Various efforts to promote the importance of insurance protection have yielded no results. Instead, blemishes and problems continue to plague the development of the Indonesian insurance industry. The Financial Services Authority (OJK) and shareholders are continuing restructuring efforts to improve the insurance sector, which has been plagued by unresolved defaults for the past five years. The OJK continues to encourage additional capital, but the low capital productivity of the insurance business makes it unattractive to investors.
Consider the Indonesian insurance industry, whose equity grew from Rp 70.12 trillion to Rp 145.95 trillion in 2025. Capital is growing, but the life insurance industry is operating without results. Gross premiums, which peaked at Rp 185 trillion in 2019, have since plummeted and never recovered. After reaching a low of Rp 109.60 trillion in 2020, it rose to Rp 162.68 trillion in 2024, and then plummeted again to Rp 160.21 trillion in 2025. In fact, the final engine of growth, health insurance, is rife with claims in the 70% to 80% range.
The general insurance industry saw its equity increase from Rp 62.48 trillion in 2019 to Rp 82.92 trillion in 2025. General insurance premiums grew from Rp 70 trillion in 2019 to Rp 160.12 trillion in 2025. However, the general insurance industry appears to be struggling with a “disease.” This growth is supported by alarming costs. For example, the vehicle and property insurance lines are plagued by price wars that leave companies scrambling for “scratch.” Furthermore, the credit insurance sector was the root cause of the collapse of Asuransi Bangun Askrida and Nasional Reasuransi, which dragged the general insurance industry down to losses of Rp 8.9 trillion in 2024.
Meanwhile, the Indonesian reinsurance industry is too small to bear the burden. With nine companies, combined assets were only around Rp 40.12 trillion as of May 2026. Its size is a fraction of the market it is supposed to support. Its capitalization is also thin, at only Rp 7.17 trillion, or 17.86% of its assets. Due to the very limited domestic reinsurance capacity, a large portion of Indonesia’s risks and the accompanying premiums are outsourced, draining foreign exchange and leaving the local market dependent on the volatility of foreign reinsurance pricing. Indonesian general insurance companies outsource approximately 45% of their premiums to foreign reinsurers. Meanwhile, life insurance companies, whose mortality risk is much more predictable, only outsource about 3%.
According to Infobank Research Bureau, in its study entitled Rating 111 Asuransi 2026 (The Rating of 111 Insurance Companies 2026), insurance business growth is hampered by three structural challenges.
The first is the market structure. Market demand is stagnant. The middle class has plummeted from 57.33 million people in 2019 to 46.7 million in 2025. The decline in the middle class is predicted to continue due to rising fuel prices, mortgage interest rates, and shrinking formal employment opportunities. With weak purchasing power, the premium market share is shrinking. People prioritize spending on basic necessities, health care, and education, which face high inflation. The budget for insurance premiums is not a priority. Except for mandatory premium payments, such as mandatory insurance from the Social Security Agency (BPJS), vehicle insurance, or home ownership loans (KPR). Over the past decade, general insurance premium growth has been driven primarily by mandatory premiums. Commercially, growth has only been around 1% per year.
The second is the industry structure. The sheer number of players in a stagnant market creates unhealthy competition. Imagine, there are only 70 general insurance companies, but the number of insurance brokers reaches 150 companies. General insurance companies are fighting for their lives, as their premiums are siphoned off by brokers, agents, and even multifinance companies or banks. Not to mention the price wars. Although regulators limit vehicle insurance acquisition costs to a maximum of 20%, in reality, they can reach 50%. Insurance companies are also embroiled in this struggle to avoid losing their share of the pie. Acquisition cost regulations are frequently violated, and the Financial Services Authority (OJK), the regulator, can only watch and divert the industry to discipline itself. Meanwhile, the Indonesian Insurance Association (AAUI), as a forum, is powerless to regulate its members.
The third factor is the legal structure. In difficult times, many individuals and businesses struggle, and some try to survive or “eat” others, one of which is insurance companies, by filing fraudulent claims. Further complicating matters is the fact that legal resolution in Indonesia often relies on a power struggle. It’s not surprising that some insureds, who feel they have “backup” from the authorities or law enforcement, dare to approach insurance companies with guns. Insurance companies that are timid may choose the easy way out by paying out claims, even though they may not be justified.
This is acknowledged by Nugraha Budi S, a lawyer who handles numerous legal cases in the Indonesian insurance industry. “Insurance companies seem to be placed in a weak position, because the insurer is the party that prepares the Insurance Agreement (Policy), while the Insured is placed in a situation where they don’t understand the agreement,” said the lawyer and founder of Nugraha Budi S and Rekan to Infobank in mid-July. (See: Exposing Insurance Claim Crimes).
These three challenges leave insurance companies with limited capital struggling to navigate a storm. It’s predicted that some insurance companies will disappear from the industry, either through mergers or by being defeated by the intense competition faced by shortcuts, or they may fail due to difficulties in meeting the capital requirements of Rp 250 billion in 2026 and Rp 500 billion in 2028. Finding new investors will undoubtedly be more difficult than ever, given the current global liquidity crunch. A number of insurance companies are struggling to survive. ?
